ATLANTA, GA– While most of the country experienced a rainy
summer, the Federal Reserve sees clearing skies ahead for the commercial real
estate market.
 |
| Brian Bailey |
That was the
consensus on the most recent episode of the “Commercial Real Estate Show” radio
program, hosted by Michael Bull of Bull Realty. Bull and his guest, Brian
Bailey, a senior financial policy analyst for the Federal Reserve Bank of
Atlanta, discussed banks, job creation and how Obamacare will affect commercial
real estate going forward.
Commercial real
estate is beginning to experience some real vibrancy, Bailey said. Vacancy
rates continue to move down, even in hard-hit sectors like retail. The uptick
in online sales has caused industrial vacancies to fall as online retailers add
distribution centers to fulfill higher-than-ever demand, he added.
 |
| Michael Bull |
Banks play an
important role in commercial real estate, and one of the Fed’s main
responsibilities is to help banks remain profitable and safe. Banks currently
have about $1.4 trillion worth of commercial real estate loans outstanding on
their books, Bailey said.
The country
currently is in the midst of a unique part of the business cycle, one that is
driven by three factors, Bailey said. First, interest rates are relatively low,
which has driven down cap rates; hence property values have increased. Second,
because interest rates are low, debt-service requirements have decreased.
Finally, the economy is improving, Bailey said.
“You don’t have
those three factors converge for a very long period of time, so the market has
to be mindful of that,” he said. “Commercial real estate is a capital-intensive
business, and at points banks have done a good job of meeting this need and
turning a profit.”
The entire show on
the Fed's view of commercial real estate is available for download at www.CREshow.com. The next “Commercial Real
Estate Show” will be available on Sept. 12 and will feature an update on tax
credits.
For a complete
copy of the company’s news release, please contact:
Stephen Ursery
The Wilbert Group
404.405.2354
sursery@thewilbertgroup.com
No comments:
Post a Comment